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  • In the recent case of Registrar General v Jea Holdings [2015] NSWCA 74, the Court of Appeal found an easement was validly created even though it was recorded as a covenant only on the title of the dominant tenement.
  • The decision follows Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11 and adds clarity to the interpretation of the meaning of ‘omitted easement’.
  • It confirms that an easement is omitted from title where it is ‘not there’. In Castle Constructions, the High Court held the easement had not been ‘omitted’ because it had been deliberately removed by the Registrar General.

Practitioners know well the significant difference between a covenant and an easement. Whilst both interests enjoy the benefits of indefeasibility once registration is achieved, each is fundamentally distinct.

A covenant is generally restrictive in nature and prohibits the use of land in a way contrary to its terms. It is an equitable interest and by its nature does not create a legal interest in the land even when recorded. Rather, the entry of a covenant on title, serves to record the interest on the burdened lot as notice to successors in title.

An easement, in contrast, is a proprietary right that falls short of possession, and where validly created, passes an in rem interest from the servient tenement to the dominant tenement. An easement can be enforced against anyone interfering with it and is capable of reducing the value of the servient tenement depending on the degree of interference caused by the easement.

In the recent decision of Registrar General v Jea Holdings [2015] NSWCA 74, the Court of Appeal examined a covenant recorded on the benefited land and held that whilst the transfer that created it was noted on title as a covenant, with its terms drafted restrictively and the agreement itself referred throughout as a covenant, it was in fact an easement because of its substantive effect. Furthermore, the easement was found to be validly created even though the relevant notation was not entered on the certificate of title of the servient tenement.

Section 42 of the Real Property Act 1900 (the Act) allows the registered proprietor to take as conclusive all interests and estates registered on title subject to specific exceptions such as an ‘omitted easement’(s 42(1)(a1)). In the present case, the Court ordered the respondent to take their title subject to the ‘omitted easement’, thereby essentially elevating what was recorded as a covenant on the benefiting lot’s title, to take effect as a validly created easement.

In 2011, the respondent had acquired three lots of land for value. A fourth lot (lot 4), was used as a car park. The site of a neighbouring lot was a hotel owned by the second respondent, Awar Pty Ltd. Recorded on the title of the hotel was a covenant restricting use of the land on lot 4 to be exclusively used as a carpark for the benefit of the hotel and the respondent’s shopping centre guests. The covenant was recorded on the title for the benefiting hotel lot only.

In 2012, Awar applied to the Registrar-General to have the covenant registered as an easement on the certificate of title for lot 4, being the burdened lot. The Registrar General issued a notification under s 12A of the Act proposing to register the burden of the easement on the folio of lot 4. Jea Holdings successfully applied to the Supreme Court to restrain the Registrar General.

The Registrar General appealed.

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